MicroRNA (miRNA) genes encode an abundant class of ~22-nucleotide small RNAs that are thought to control gene expression at the post-transcriptional levels. Although the importance of miRNA-mediated gene regulation is now evident, as miRNA genes were shown to play diverse functional roles in animals, their mechanisms of action remain elusive. We have recently found that miRNA genes encoding identical mature miRNAs could have distinct biological activities that are determined by their cognate pre-miRNA loops, revealing unexpected regulatory complexity encoded in the pre-miRNA loops. These findings prompted us to reexamine some of the fundamental assumptions in the miRNA field. It was noted in the original discovery of the C. elegans lin-4 gene that mutations and deletions in lin-4 genes invariably affect including the primary (pri), precursor (pre), and mature miRNA species, which all contain sequences complementary to cognate target genes. Thus, phenotypes observed for loss of miRNA genes in worms and mice cannot be attributed to mature miRNA specie alone. Together, the limitations of current assumption and our surprising discovery of pre-miRNA loop function suggest that pri- and pre-miRNA species may play direct roles in target gene regulation. Here we propose to examine the mechanisms by which pre-miRNA loops control activity of miRNA genes using biochemical and genetic approaches. We will further dissect the structure and sequence elements beyond mature miRNA regions that are important for the activity of miRNA genes (aim 1), identify the protein and RNA components that contribute to the pre-miRNA loop functions (aim 2), and delineate the roles of premiRNA loop nucleotides in target gene recognition (aim 3). The proposed study will shed fundamental insights into gene regulation by miRNA genes and yield novel principles for target gene prediction and for designing more efficient gene silencing molecules targeting messenger RNAs and miRNA genes.